UNDERSTANDINGTHEINTERNATIONAL REAL ESTATEBUYER

Survey Methodology• The survey was sent via email to a random sample in

October 2013, and 218 valid survey responses werereceived.

• All eligible respondents closed escrow within twelvemonths prior to October 2013.

International Buyers areGetting a Bigger Slice ofthe Market than LastYear

Q. Was the buyer an international buyer – a person who was a citizen of another country who wished topurchase residential real estate in the U.S.?

8%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

2008 2009 2010 2011 2012 2013

SERIES: 2013 Housing Market SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Many REALTORS® worked with Internationalbuyers in the 2013

Q. How many properties have you sold to an international buyer in the last 12 months?

71%

14%

6%4% 2% 4%

79%

9%5% 3% 1% 3%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

0 1 2 3 4 5+

2013

2012

# of Properties

% Who Sold to International Buyers

# of Properties Sold to International Buyers in the Last 12 Months

SERIES: 2013 Housing Market SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

China,Canada, and Mexico are still the majorsources of international buyers

32%

16%

11%

6%

3%

3%

3%

3%

2%

2%

China

Canada

Mexico

Japan

France

India

Russia

United Kingdom

Brazil

Germany

0% 5% 10% 15% 20% 25% 30% 35%

Please tell us about your last closed transaction with an international client. What is your client’s country of permanent residence?

Most international buyers are individual buyers

Was your last international client an:

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Individual LLC Corporation LLP Other

86%

8%3%

0%3%

TheTypical International Buyer

86%Individuals

70%Married

81%College

Educated

60%Males

45%Asian

46Years Old

$200KMedianIncome

For half of all international buyers, it was their firsttime purchasing a property in the U.S.

Yes, 51%

No, 35%

Unsure, 13%

In your last closed transaction with an international client, was that the buyer’s first home purchased in the U.S.?

Other Properties International Buyers Own

How many other properties does your last international buyer own?

13%

30%

20%

10%

7%

20%

0%

5%

10%

15%

20%

25%

30%

35%

1 2 3 4 5 6+

WHYTHE UNITED STATES?

Majority only considered the U.S.Considered

OtherCountries,

15%

Consideredonly the U.S.,

85%

In which other countries did your last international buyer consider purchasing real estate?

Why the United States?

2%

3%

4%

6%

9%

9%

20%

20%

0% 5% 10% 15% 20% 25%

To obatain a visa, immigration

Political stability & safety

Affordable pricing

Educational opportunity

Changes in work & employment

Investment opportunities

To be closer to family &friends

Desirable location & climate

Q. Why did your last international buyer choose to purchase in the U.S. as opposed to the other countrieshe/she/they considered?

International buyers purchased primarily forinvestment purposes

5%

5%

5%

7%

12%

14%

18%

0% 5% 10% 15% 20%

Investment to acquire legalpermenant U.S. resident…

Tired of renting

Affordable price

Desired a better/otherlocation

Changed jobs/relocated

To rent out property

Investment/tax advantagesin U.S.

What was your clients’ main reason for buying now in your last closed transaction with an international client?

Traditional buyers purchased because …

9%

2%

3%

4%

4%

4%

15%

17%

21%

23%

0% 5% 10% 15% 20% 25%

Other

Foreclosure/Short Sale/Default

Retirement/Move to Retirement Community

Changed Jobs

Desired Smaller Home

Change in Family Status

Desired Better Location

Desired Larger Home

Investment/ Tax Considerations

Tired of Renting

SOURCE: 2013 Annual Housing Market SurveyWhat was your clients’ main reason for buying now in your last closed transaction with an international client?

Reasons to Buy inCalifornia

Mild year-around weather

Amazing outdoor environment

Advanced Educational Opportunities

Easy access to variety of entertainment throughout California

Climate inCalifornia

• Moderate temperature year round• Dry weather• Clear Skies

AmazingOutdoor Environment

Advance EducationalOpportunities

System # of Campuses Examples

University of California 10 • University of California, Berkeley• University of California, Los Angeles• University of California, Riverside• University of California, San Diego

California State University 23 • Cal State University, Fullerton• Cal State University, Northridge• Cal State Polytechnic University,

Pomona

California Community College 109+ • Santa Monica College• Pasadena City College

Private University Hundreds • California Institute of Technology• Pepperdine University• Stanford University• University of Southern California

EasyAccess to aVariety of Entertainment

Most international buyers did not purchase theirproperties as a primary residence

What was the intended use of the property in your last closed transaction with an international client?

4%

31%

33%

32%

0%

6%

19%

75%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Other

Vacation/Second Home

Investment/Rental Property

Primary Residence

Traditional Buyer

International Buyer

SouthernCalifornia is a popular destination forinternational buyers

Where was the property in your closed transaction with an international client located?

0%

10%

20%

30%

40%

50%

60%

70%

Northern Southern Other

22%

66%

12%

TopCounties where International Buyers Bought

Where was the property in your closed transaction with an international client located?

0%

5%

10%

15%

20%

25%

30%

35%

Los AngelesCounty

OrangeCounty

San DiegoCounty

RiversideCounty

Contra CostaCounty

Santa ClaraCounty

35%

22%20%

14%

7% 7%

International buyers are heavily concentrated insuburban and urban areas

1%

8%

9%

40%

41%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

Other

Small town/rural area

Resort area

Central city/urban

Suburban

Please select the category that best describes the location of the property in your last closed transaction with aninternational client?

Seven out of ten of international buyers purchasedan equity sale

0%

10%

20%

30%

40%

50%

60%

70%

Equity Sale REO Sale Short Sale Other

68%

15% 15%2%

What type of purchase/sale did your last international client(s) make?

Majority Bought a Single Family Home

5%

0%

2%

5%

24%

63%

0% 10% 20% 30% 40% 50% 60% 70%

Other

Commercial office space

Comercial retail space

Multifamily home

Condo/townhome

Single family detached home

What type of property did your last international client purchase/sell?

A typical international buyer purchased a propertywith …

4Bedrooms

2,000Square

Feet

2.5Baths

2 CarGarage

Square Footage of the Property

What was the square footage of the property in your last closed transaction with an international client?

6%

44%

29%

10%

3%

4%

5%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

< 1,000 ft

1,000 - 1,999 ft

2,000 - 2,999 ft

3,000 - 3,999 ft

4,000 - 4,999 ft

5,000 - 5,999 ft

6,000+ ft

Square Footage of the Lot

What was the square footage of the property in your last closed transaction with an international client?

9%

13%

17%

23%

9%

9%

7%

7%

8%

0% 5% 10% 15% 20% 25%

< 2,000 ft

2,000 - 3,999 ft

4,000 - 5,999 ft

6,000 - 7,999 ft

8,000 - 9,999 ft

10,000 - 14,999 ft

15,000 - 19,999 ft

20,000 - 49,999 ft

>50,000 ft

Number of Bedrooms

How many bedrooms did the home in your last closed transaction with an international client have?

0%

5%

10%

15%

20%

25%

30%

35%

40%

1 2 3 4 5 6 7

0%

4%

19%

40%

32%

4%

1%

Number of Bathrooms

How many bathrooms did the home in your last closed transaction with an international client have?

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

1 2 3 4 5 6

8%

34%

42%

13%

0%3%

Garage Size

What was the size of the garage in your last closed transaction with an international client?

0%

10%

20%

30%

40%

50%

60%

70%

0 1 2 3 4

11%9%

62%

15%

2%

What amenities did international buyers want intheir properties?

Please check all the amenities of the property in your last closed transaction with an international client.

3%

3%

3%

3%

4%

4%

6%

9%

26%

44%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Workout room

Outdoor pool

Hot tub

Outdoor kitchen

Heated floors

Private beach

Putting green

Sauna

Wine cellar

Designer kitchen

Initial Listing Price

What was the initial listing price of the property in your last closed transaction with an international client?

13%

7%

12%

14%

9%

4%

8%

6%

6%

11%

3%

8%

0% 2% 4% 6% 8% 10% 12% 14% 16%

Less than $200,000

$200,000 to $299,999

$300,000 to $399,000

$400,000 to $499,999

$500,000 to $599,999

$600,000 to $699,999

$700,000 to $799,999

$800,000 to $899,999

$900,000 to $999,999

$1,000,000 to $1,499,999

$1,500,000 to $1,999,999

$2,000,000 and over

Final Sale Price

What was the final sale price of the property in your last closed transaction with an international client?

14%

5%

14%

14%

9%

4%

8%

5%

6%

11%

2%

7%

0% 2% 4% 6% 8% 10% 12% 14% 16%

Less than $200,000

$200,000 to $299,999

$300,000 to $399,000

$400,000 to $499,999

$500,000 to $599,999

$600,000 to $699,999

$700,000 to $799,999

$800,000 to $899,999

$900,000 to $999,999

$1,000,000 to $1,499,999

$1,500,000 to $1,499,999

$2,000,000 and over

More than half of international buyers paid at orabove the asking price

12%

9%

25%

32%

11%

6% 5%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Under -10%

-6% to-10%

-1% to-5%

0% 1% to5%

6% to10%

Over10%

International BuyersDistribution of Sales by % Above/Below List Price

22% of SalesAbove Asking

Price

26%

50%

0%

10%

20%

30%

40%

50%

60%

2005 2006 2007 2008 2009 2010 2011 2012 2013

Traditional Buyers% of Sales above Asking Price

Long Run Average = 18%:

International Buyers vs.Traditional Buyers

International

Buyers

Traditional

Buyers

Squre Footage 2,000 1,659

Final Sale Price $525,000 $392,900

% of Sales With Price Above

Asking Price22% 50%

THE BUYING PROCESS

International Buyers FoundTheir Properties fromthe MLS

How did you find the property for your international buyer in your last closed transaction?

5%

2%

2%

2%

3%

5%

5%

5%

71%

0% 20% 40% 60% 80%

Other

From seller directly

Builder

Advertisement

Open house

Client found property

My listing

Another agent's private listing

MLS

Weeks Spent Looking for Property

How many weeks did you spend looking for a property with your last international buyer?

0%

5%

10%

15%

20%

25%

30%

35%

2 weeks or less 3-7 weeks 8-12 weeks 13-16 weeks 17 weeks ormore

30% 31%

14%

6%

18%

Median: 5 weeks

Number of PropertiesViewed

How many different properties did you view with your last international buyer prior to the client making apurchase?

14%13%

12%

9%

11%

12%

14%14%

0%

2%

4%

6%

8%

10%

12%

14%

16%

1 to 2 3 to 4 5 to 6 7 to 8 9 to 10 11 to 15 16 to 20 21 or more

Median: 9

Offers Made on Other Properties

How many offers did your last international buyer make on other properties (in addition to the one purchased)?

0%

5%

10%

15%

20%

25%

30%

35%

40%

1 2 3 4 5 6 to 10 11 or more

37%

13% 12% 12%

5%

13%8%

Median # of offers made = 2

Properties sold to an international buyer typicallystayed on the market for a month

How many days was the property on the market in your last closed transaction with an international client?

57%

22%

10%

4%7%

0%

10%

20%

30%

40%

50%

60%

1 to 30 Days 31 to 60 Days 61 to 90 Days 91 to 120 Days 121 or More Days

Days on market (median) = 30 days

International Buyers vs.Traditional Buyers

International

Buyers

Traditional

Buyers

Weeks Looking for Property 5 10

# of Properties Viewed 9 10

# of Offers Made on Other

Properties2 3

All Cash International Buyers

Obtainedfinancing,

31%

All cash, 69%

How did your last international buyer pay for the property?

All Cash International Buyers

SOURCE: 2013 International Client Survey, 2013 Annual Housing Market SurveyHow did your last international buyer pay for the property?

0%

20%

40%

60%

80%

100%

International buyers Traditional buyers

69%

27%

31%

73%

All cash Obtained financing

Source: National Association of Realtors®

Down-Payment as Percentage of Sale Price

How much was the down payment for the home purchased (as a percentage of the sale price) in your last closedtransaction?

8%

14%

27%

14%

22%

14%

1%

39%

55%

0%4%

0%0%

10%

20%

30%

40%

50%

60%

10% or less 11-20% 21-30% 31-40% 41-50% Greater than50%

International Buyer Traditional Buyer

Sources of Down-Payment

18%

2%

2%

6%

12%

65%

0% 20% 40% 60% 80%

Unsure

Other

Sale of personal assets (other than real property)

Gift

Proceeds from a sale of previous property

Personal savings

What was the source of the down payment in your last closed transaction with an international buyer?

Difficulty in Obtaining Financing

Please rate how easy or difficult it was for your last international buyer to obtain financing.

11%

0%

13%

19%

17%

19%

0%

15%

0%

6%

0%

5%

10%

15%

20%

25%

1 2 3 4 5 6 7 8 9 10

Median = 5

Difficulty in Obtaining Financing

SOURCE: 2013 International Client Survey, 2013 Buyer SurveyPlease rate how easy or difficult it was for your last international buyer to obtain financing.

11%

0%

13%

19%17%

19%

0%

15%

0%

6%

0% 0% 0% 0%

6% 6%

11%

6%

38%

33%

0%

5%

10%

15%

20%

25%

30%

35%

40%

1 2 3 4 5 6 7 8 9 10

International Buyer Traditional Buyer

Only a few international buyers had difficulty inbringing funds from outside theU.S.

18%

8%

15%

58%

0% 10% 20% 30% 40% 50% 60% 70%

Unsure

Yes

N/A, client had funds in the U.S.

No

Did your last international buyer encounter any difficulty in bringing funds from another country into the U.S. inyour last closed transaction with an international client?

What other problems did international buyersencounter?

What, if any, other problems did your last international buyer encounter? Please select all that apply.

• Difficulty in finding a property

• Problems with immigration

• Financing

• Challenges finding insurance

• Documentation

• Decide on which city to buy

Most did not hire an attorney or a tax professionalto facilitate their transaction

Yes, 6%

No,88%

Unsure,5%

Hired an Attorney

Did the international client hire an attorney to help facilitate your last closed transaction?Did your international client hire a tax professional (i.e. accountant, financial consultant, etc.) to help facilitateyour last closed transaction?

Yes, 6%

No,88%

Unsure,5%

Hired a Tax Professional

Many international buyers did at least some work ontheir properties, which typically costs them $10,000

What type of rehabilitation / remodeling was done on the property in your last closed transaction with aninternational client? How much money did your client invest in rehabilitating/remodeling the property in yourlast closed transaction with an international client?

37%

8%

13%

41%

None Majorremodeling

Majorcosmetic

repairs

Minorcosmetic

repairs

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Work Done on Property

32%

13%

19%

12%

5%

2%

7%

11%

0% 10% 20% 30% 40%

Less than $5,000

$5,000 to $9,999

$10,000 to $19,999

$20,000 to $29,999

$30,000 to $39,999

$40,000 to $49,999

$50,000 to $99,999

$100,000 or greater

Money Spent on Repair/Remodel

Property Management

Who will manage the property in your last closed transaction with an international client?

0%

10%

20%

30%

40%

50%

60%

Owner Unsure Property manager Other

56%

17% 15%11%

CLIENT/AGENT RELATIONSHIP -COMMUNICATION

International buyers relied more on referral andrelationship when connecting with their agents

9%

63%

28%

12%

21%

61%

0% 10% 20% 30% 40% 50% 60% 70%

Advertising

Internet

Relationships and Contacts

International Buyers Traditional Buyers

SOURCE: 2013 International Client Survey, 2013 Buyers SurveyHow did you find your last international client?

International buyers relied more on referral andrelationship when connecting with their agents

7%

1%

3%

3%

4%

4%

5%

6%

10%

19%

19%

20%

0% 5% 10% 15% 20% 25%

Other

Social media

Client is a relative

"For Sale" sign

Client responded to my ad

Prior dealings iwht my brokerage

Open house

Referral from another agent

Client is a friend

Referral from a friend

Client found me online

Referral from a previous buyer

How did you find your last international client?

Primary Language of International Buyers

1%

2%

3%

3%

4%

9%

26%

36%

0% 5% 10% 15% 20% 25% 30% 35% 40%

Portuguese

German

French

Japanese

Russian

Spanish

English

Chinese

What is your last international client’s primary language?

… but most of them were communicated in English

1%

7%

8%

15%

70%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Russian

Other

Spanish

Chinese

English

In which language did you primarily communicate with your last international client?

Use ofTranslators

Yes, 3%

No, 97%

Did you use a translator in your last closed transaction with an international client?

Email Communication

How did you primarily communicate with your last international client?

0%

10%

20%

30%

40%

50%

60%

Email Telephone Text message Video calls Other

58%

29%

7% 1% 5%

Email Communication

How did you primarily communicate with your last international client?

58%

29%

7%

1%5%

43%

51%

5%

0% 0%0%

10%

20%

30%

40%

50%

60%

70%

Email Telephone Text message Video calls Other

International Buyers

Traditional Buyers

Devices of Communication

4%

1%

1%

5%

7%

7%

30%

45%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Other

Fax machine

Landline

Tablet

Mobile phone

Desktop

Laptop

Smartphone

Which technological device did you utilize the most in communicating with your last international client?

CONCLUDING REMARKS

TheTakeaway

• California housing market will continue todraw interests from international buyers

• International buyers purchased primarily forinvestment purposes

• International buyers relied more on referraland relationship when connecting with theiragents

•“The Fundamentals of PropertyManagement”

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